Yahoo Finance Rich US Families Are Applying For Second Citizenships And Building 'Passport Portfolios' As A Backup Plan For Global Uncertainty
Wealthy Americans are diversifying their nationality portfolios in response to global uncertainty, often seeking second or multiple citizenships as financial and personal safety nets.
According to a CNBC report, the trend has surged with more U.S. families applying for additional national residencies through various citizenship programs. Dominic Volek of Henley & Partners describes this trend as building “passport portfolios,” which are particularly appealing given the geopolitical climate.
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Volek said having multiple citizenships offers significant advantages, such as enhanced travel flexibility, increased safety during international business trips and broader options for managing cross-border finances. Programs in countries like Portugal, Malta, Greece and Italy are popular among wealthy Americans, with Portugal’s Golden Visa program offering residency and eventual citizenship in exchange for a significant investment in the country’s economy.
Acquiring a second passport can also serve as a contingency plan for retirement, offering the potential to live, work and study in politically stable and economically vibrant countries. This strategy also is a hedge against the unpredictable nature of U.S. politics and other global risks.
The movement of millionaires across borders is growing, with a record number of wealthy people relocating globally in 2024 because of wars, stringent government policies on wealth and general political instability. The United States remains a favored destination, continually attracting a significant number of global millionaires, despite being a major source of citizens seeking alternative residencies.
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The rise in “domicile diversification” reflects a broader trend of high-net-worth individuals preparing for multiple potential future scenarios, ensuring they and their families have secure and versatile options no matter how global circumstances evolve.
While “passport portfolios” provide a financial safety net for wealthy Americans against global instability, such options aren’t viable to most people. However, there are alternative strategies that can safeguard their financial well-being. Diversifying investments across various asset classes and geographical regions can help spread risk and mitigate the impact of market downturns. Building a substantial emergency fund is also crucial, providing a financial cushion that can be accessed during economic uncertainties without liquidating other assets at a loss.
Ensuring adequate insurance coverage — including life, health and property insurance — can protect against unforeseen financial burdens caused by emergencies. Regular contributions to retirement accounts like 401(k)s or individual retirement accounts (IRAs) offer long-term security, benefiting from tax advantages and compound interest over time.
Consulting with a financial adviser is a wise move for anyone looking to secure their financial future. Advisers can provide personalized insights and strategies tailored to individual financial situations and goals. This is especially useful for those seeking to navigate the complexities of investment diversification and risk management in uncertain economic times.
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*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.
Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.
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